Hinge Manufacturing's cost of goods sold is $420,000 variable and $240,000 fixed. The company's selling and administrative expenses are $300,000 variable and $360,000 fixed. If the company's sales is $1,580,000, what is its contribution margin?
A) $260,000
B) $860,000
C) $920,000
D) $980,000

Question

Quizplus · Accepted Answer

Contribution Margin = Sales - Variable Costs

Variable Costs = Cost of Goods Sold + Selling and Administrative Expenses (only variable portion)

Variable costs = $420,000 + $300,000 = $720,000

Sales = $1,580,000

Contribution Margin = $1,580,000 - $720,000 = $860,000

Hinge Manufacturing's Cost of Goods Sold Is $420,000 Variable and $240,000